All Forum Posts by: Jas Sarn

Thank you @Bill B. and the rest of the team here !

I've been doing my own taxes. I found out today after investigating I can file form 3115 that will claim all the depreciation deduction since I started to have this property as a rental vs. the Amended tax return which I can do only for the past 3 years.

I am reaching out to tax experts to do it the right way.

Quote from @Bill B.:

You are right about having to buy $600k but you are wrong about not having any depreciation. You’ve been depreciating the building value divided by 27.5 years. Or at least the IRS is going to tax you like you have been. If you haven’t you need to find a CPA and file amended returns for the past few years. 

Ballpark depends on what percent of that $200k was the value of the land which is not depreciable. If it was 20% then you’ve been depreciating 80% of the $200k ($160k) at a rate if $5,818 per year. So basis is $200k minus years owned times $5818. Make sure you’ve been taking this mandatory deduction. 

Thank you for the Depreciation point. I have had this home for 5 years and never took depreciation. Shoot. My AGI is over $100,000. Can I still take depreciation ? I am going to ask a tax professional. But shoot this would be a BIG miss 

Thanks, but this statement below would be incorrect

"So- if you paid $200k and sell for $600K, you need to put at least $400k into your next deal in order to defer gains."

If I put just $400K (which is the gain portion) into the next deal through 1031, the $200K becomes a boot, which sucks because that $200K is my cost basis or principal that was earned and paid income taxes before this home was bought.

Correct me if it is not the case.

BTW, I do not have any capital improvements or depreciation or mortgage.. So the question is very straightforward.

we should keep track of the cost basis for the future right ? that $200K becomes cost basis when at some point the future we decide to sell the new property and take cash.

Thank you. The house is paid off and I do not have any mortgage.

It is just unfair to treat the original investment ($200K) for which taxes were paid when it was earned earlier and tax it again :(

I am looking for a 1031 exchange to sell one property in California / SF Bay Area to multiple properties in other states.

I bought the home for $200K. It is worth now $600K. I plan to invest the $400K of gains in potentially 2 homes in other states and generate more rent and also diversify out of CA (as my primary residence is also in CA)

Will my original $200K investment on the home that I am selling  (I plan to cash this for different uses) considered a Boot ? If yes, Why should it be ?

I am not making any capital gains from this transaction as I am investing ALL of the $400K in capital gains back in real estate through 1031

Thanks